Publication: The Place Premium : Wage Differences for Identical Workers across the US Border
Date
2008-07
ISSN
Published
2008-07
Author(s)
Clemens, Michael A.
Montenegro, Claudio E.
Pritchett, Lant
Abstract
This paper compares the wages of workers
inside the United States to the wages of observably
identical workers outside the United States-controlling for
country of birth, country of education, years of education,
work experience, sex, and rural-urban residence. This is
made possible by new and uniquely rich microdata on the
wages of over two million individual formal-sector
wage-earners in 43 countries. The paper then uses five
independent methods to correct these estimates for
unobserved differences and introduces a selection model to
estimate how migrants' wage gains depend on their
position in the distribution of unobserved wage
determinants. Following all adjustments for selectivity and
compensating differentials, the authors estimate that the
wages of a Bolivian worker of equal intrinsic productivity,
willing to move, would be higher by a factor of 2.7 solely
by working in the United States. While this is the median,
this ratio is as high as 8.4 (for Nigeria). The paper
documents that (1) for many countries, the wage gaps caused
by barriers to movement across international borders are
among the largest known forms of wage discrimination; (2)
these gaps represent one of the largest remaining price
distortions in any global market; and (3) these gaps imply
that simply allowing labor mobility can reduce a given
household's poverty to a much greater degree than most
known in situ antipoverty interventions.
Citation
“Clemens, Michael A.; Montenegro, Claudio E.; Pritchett, Lant. 2008. The Place Premium : Wage Differences for Identical Workers across the US Border. Policy Research Working Paper No. 4671. © World Bank, Washington, DC. http://openknowledge.worldbank.org/entities/publication/cd7be2f1-b5d6-542c-b14d-d6bab4e769f6 License: CC BY 3.0 IGO.”
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